Philippines emerging onto favourable manufacturing track

The sadly immature Philippine manufacturing sector is beginning to show its capable of more than just baby steps. The jobs-starved nation has captured the vehicle transmission assemblies exportation market in ASEAN away from Japan, ironically through the upped production of locally based Japanese automobile giants Toyota, Mitsubishi, and Isuzu.

According to Ferdinand Raquel Santos, president of the Motor Vehicle Parts Manufacturing Association the Philippines (MVPMAP), $3.5 billion worth of car parts have been exported from the Philippines to the ASEAN region, compared to Japan’s $1.1 billion, he told Business Insight.

The trend is a hopeful indicator that the Philippines is emerging onto the right track to start succeeding as a favourable production base. Similarly, in recent years, Indian BPO companies have been “cutting off their own legs” to move to the Philippines, in turn shrinking their domestic market, attracting to the Southeast Asian nation by its high-quality human capital.

For Japan, the same case has been made. “[Filipino] workers generally have good working behaviour and they speak English well,” Nobuo Fujii, executive director of the Japanese Chamber of Commerce and Industry of Philippines, said on June 25.

Japan is the largest investor in the Philippines’ semiconductor industry, which represents the largest amount of manufacturing jobs. Moreover, Bandai, a major Japanese toy manufacturer, is also expanding in the Philippines, speaking well for growth outside the electronics segment.

Now Japan may have also discovered that the Philippines has automotive potential, albeit latent.

The Philippines accounts for 25 per cent of total car parts exported to ASEAN, with nearly all of them accounted for by transmission assemblies.

However, of the 2,000 parts required to produce a vehicle, very few of them except for transmission assemblies come from the Philippines, meaning that local car manufacturers still have to heavily rely on importing the majority of car parts, namely from Thailand.

The sadly immature Philippine manufacturing sector is beginning to show its capable of more than just baby steps. The jobs-starved nation has captured the vehicle transmission assemblies exportation market in ASEAN away from Japan, ironically through the upped production of locally based Japanese automobile giants Toyota, Mitsubishi, and Isuzu.

According to Ferdinand Raquel Santos, president of the Motor Vehicle Parts Manufacturing Association the Philippines (MVPMAP), $3.5 billion worth of car parts have been exported from the Philippines to the ASEAN region, compared to Japan’s $1.1 billion, he told Business Insight.

The trend is a hopeful indicator that the Philippines is emerging onto the right track to start succeeding as a favourable production base. Similarly, in recent years, Indian BPO companies have been “cutting off their own legs” to move to the Philippines, in turn shrinking their domestic market, attracting to the Southeast Asian nation by its high-quality human capital.

For Japan, the same case has been made. “[Filipino] workers generally have good working behaviour and they speak English well,” Nobuo Fujii, executive director of the Japanese Chamber of Commerce and Industry of Philippines, said on June 25.

Japan is the largest investor in the Philippines’ semiconductor industry, which represents the largest amount of manufacturing jobs. Moreover, Bandai, a major Japanese toy manufacturer, is also expanding in the Philippines, speaking well for growth outside the electronics segment.

Now Japan may have also discovered that the Philippines has automotive potential, albeit latent.

The Philippines accounts for 25 per cent of total car parts exported to ASEAN, with nearly all of them accounted for by transmission assemblies.

However, of the 2,000 parts required to produce a vehicle, very few of them except for transmission assemblies come from the Philippines, meaning that local car manufacturers still have to heavily rely on importing the majority of car parts, namely from Thailand.